tv Squawk on the Street CNBC February 7, 2013 9:00am-12:00pm EST
embrace apple. >> you have a horse and led him to water around not going to drink, maybe you have to start reed issing him intravenously. maybe that is what he is doing, he see ascertain intransigence he has to find a work-around for. >> i thank you should we be fed up with the best performing stock -- one of the best performing stocks of all time? it is going down a lot. should we decide that this is -- they are the villain after they have the been the most innovative company in american history, other than, say, ford moater? i wish they would increase the dividend. i don't know why would you do -- argue this. this is a great intellectual exercise. we have seen this our career. liberty media tracking stock. maybe we should do it -- an ipad tracking stock. >> what john malone could do with apple's balance sheet would boggle the mind. maybe create value. >> send the money to ireland and get a better return. i want growth. i want growth. sorry, i'm traditional investor.
>> everybody wants that the meantime, can't they do something else to appease investors in this follows on the heels of bill miller, legg mason, financial times, says keep every dollar cash on your balance sheet but use the free cash flow, paid out a dividend on the free cash flow, the stock would go up 50%. >> bill miller the past 24 hours, bethany mcclaine -- >> $200 -- >> marco rubio is out this morning on twitter saying the number of chargers is driving him crazy and moving closer to samsung. >> his response in the state of the union. >> i think time for a congressional investigation into the most successful company on earth. it's really time to -- house on american activities committee part two. >> briefly stated this idea that einhorn and bryce said he has brought up the company they considered and punted on is the idea of issuing, at no cost, a perpetual per pre-ferred to stock to exsig hold hearse pay you about a 4% yield.
said another way, around 25 multiple, right, 4% yield, you can back in on an eight multiple stock. >> a blended multiple pullup? >> yielding 4%. >> maybe the part we are not paying enough greed dense to is the fact that he maintains his position, einhorn, owns more now than he says he ever has. >> didn't help his performance last year. came in with rather pedestrian numbers, especially given he was right on a number of big shorts, yet at the end of the -- and yet he did not manage to put up numbers that were notable. >> i have got a solution for him. you can always sell the stock. don't like what they are doing, you can sell it. i mean, this isn't necessary -- i say that because i understand. we go back to gordon gekko, teldar, whatever. say this underperforming stock,
they got to do something, we put it in play. do we want to put this a until play, so to speak, with the perpetual preferred? call up tim cook, a question does he think tim xook doing a great job? i didn't hear, yes, i think he is. i think there is a -- i think that if we had an i shall unit proxy didn't want to increase the dividend, that would be more radical. did approach him with a novel idea, i think we should all think about novel approaches to a large cash position. my novel idea they buy twitter. my novel idea they buy netflix. i have a lot of novel ideas i think would move the stock up because it would increase the growth rate. a novel idea of doing perpetual preferred -- >> don't preclude the other though. >> in this case, preferred is just a yield. in other words, only on cash, not even distributing the cash poor to pay that yooe yield. >> my idea is to have the fed reserve increase the rate for 3% and the earnings explode.
>> you there go >> you there go >> intellectual exercise. i love a good intellectual exercise. i took classes in intellectual exercise. they are exciting. tim cook, listen to conference call, tim cook is happy it. >> an activist campaign mounted on the company. >> isn't that what it is? >> slight what it s you have got the biggest market cap company in the world, still exceeds exxon. >> yeah. exxon. >> widely distributed share base. i have no idea how they are possibly going to really think they can mount anything that's going to work here conceivably, other than public pressure, but we will see. >> do you think the stock is down this much because they don't do anything with the cash or think because the growth slow they missed a couple quarters ago? >> i think the growth slow and also because it is changing hands, not doing anything with cash but so not attracting enough value in investors yet. >> paying a dividend. i have said to them they should -- i wish odd larger dividend. i wish they did more of a buy back. i think they should put that cash to work. it has not been -- depression
mentality? i don't know. i'm not in their heads. i feel like they're in a mode that just says there's a rainy day and we will be ready. i think this is a thermonuclear rainy day with a "blade runner" kind of thing to worry b >> acid rain kind of day. >> ridley scott does apple. >> yes, in the end, their analysis, if you are a large shareholder and the stock is not going up, you're looking for something that can go up, here is a novel solution. guys, return capital this way using your balance sheet. and the fact they bothered to put on the proxy saying, listen, you -- there is an idea -- >> completely off >> >> that idea you have come with is just a real stinker so we are not gonna do t >> obviously what one of the key stories of the day. some of the other stories we are following this morning takes us to same-store sales what a january for retailers. several big names blowing out
estimates for the month, despite all those worries about the payroll tax. who won? who lost in the cramer knows. former treasury secretary bob ruben in a rare interview on squawk this morning has words about too big to fail, the sequester and how he missed the crisis at citi. is it time to say good-bye to the u.s. airways brands? a deal looks close for amr's american to take it over, become the number one brand. does consolidation mean airlines just got more attractive. we start off with the retailers, january report card, macy's posting an 11.7% jump in same-store saturday and raising guidance. stellar results from some of the retailers. >> such a mixed picture. some guys -- kohl's, people decided their clearance is moving the stock up nicely.
gap strong happens moved. consistently great job. people talking about urban outfitters doing a great job, doesn't seem like the stocks right now are moving the way you would think they would. i don't know how many people are counting on this particular month -- >> a short month, bleedover from the holidays. the rate of beats, 59% is the strongest since august, which was 86%, thanks to mkm partners. the number of them that have outpaced expectations is pretty big, relative to everything else. >> this is historically the one month i don't care about valentine's day matters for retail. i think one of the takeaways from the conference calls we have had, companies lost a day or two. i had irwin simon, he lost a day or two. ralph lauren talking about losing a day or two the numbers aren't that bad for the first -- you look at the last quarter, which does matter. the economy not breaking down
there is the take away. >> i thought macy's was an interesting report. they talked about bringing new inventory in december to serve the january and postholiday shoppers and that seemed to work, they say. online sales were also big. that's important to keep in mind because macy's calculation, they include online sales and the same-store sales calculation. look at the online sales, up 49% in january, year on year, huge jump there, that add 3% to the same store sales numbers, that really helped fuel the beat. remember this week, citi upgraded macy's andgets and some others on the basis that they have more home merchandise so they can participate in the sort of recovery in the market, the housing market. here we are, up again. >> funny, macy's did not -- cited no one for a long time. this number really does pop versus the others. herb greenberg did a story yesterday how limited didn't move, despite a good dividend. stock down versus the numbers.
macy seas the standout. i think some of the guys who have done consistently well, like gap, are doing consistently well. it is just kind of a really bizarre group of thing to see kohl's break out here, see macy's break out, this is kind of a return to the department store as opposed to the individual -- >> funny you say that ron johnson on our air yesterday vowing to go positive comp in fiscal '13, did he draw a bit of line in the sand there and some people were left shaking their heads afterwards. >> he is very positive man. >> he update us how far along he is? >> accident get a percentage. interesting interview. he is positive better than being negative. >> one of the few losers, ann taylor, minus one versus a 49 estimate. hard to find big misses in the space. >> specialty store thing. ann does worse. and i think macy's being home
goods does matter. things are fine. the fact is we did have a payroll tax increase some people were very worried about. i don't see anything in these numbers that indicates that matters. >> when we come back, we will hear what bob ruben told the guys on "squawk" this morning. wait until you hear what he has to say about how he missed the crisis at citi. expedia shares doubled the past year. ask the ceo how he plans to keep the momentum going. futures relatively flat today, moderate upside at this moment. squawk on the streak live from post nine of the nyse when we return. the momentum going.
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keep more presidents in your wallet. sleep train's presidents' day sale is on now. superior service, best selection, lowest price, guaranteed. ♪ sleep train ♪ your ticket to a better night's sleep ♪ expedia shares doubled the former treasury secretary robert rubin a guest on "squawk box" this morning exclusively. asked about sandy wild's call to break up the big banks. >> too big to fail is an enormously important question. came up in 1990 when a group of banks were in difficulty. i think it's an enormously important question. i think the problem is that if you look at what sandy had to say, and i have a lot of respect for sandy, but i think that if you followed sandy's path and you broke up the banks in some fashion or other, as he's describing, the risk isn't going
to go away. the systemic risk, the too big to fail risk will simply move from one place to another place. >> interesting to see the divergence of opinion between the guys who saw different things, jim, in your time together. >> would have liked to ask the former treasury secretary what happened with the cdos at citi under his -- when he was there i think that there's some interesting stories lately about the cdos and not just from -- >> a complete failure to appreciate the risk of the super senior tranche, a made up word, that sunk that bank, more or less sunk that bank >> >> he was the risk meister. >> he wasn't paying any attention when he was in the chairman's office at citi, which i think he said. i'm still curious what the follow s you split up the big banks, where is the -- why, why is there still a too big to fail risk? >> it's risk of both of these institutions failing at the same
time. does it make a difference if it is one large institution or several failing at once in the stress of the system, theoretically, could be similar. >> a lot done to raise capital, to raise capital. european banks weren't forced like we did with treasury secretary geithner to raising a huge amount of cash, we still see systemic risk in a spanish bank, for instance. now, you know, i applaud what santander doing, raising lots of money around the world. it is hard to really fault the american banks for what they do.
do we want ten jpmorgans. anyone remember the great anti-trust case against ma bell, broke it up into -- remember, we had all this great -- southwest bell. put them back together. >> at&t going out of business. >> i want to know about the cdos and why did justice decide with e-mail wes knew about -- >> raising a lot of good questions. still people who say we should have let a lot of things fail and the system would have recalibrated itself in a real way. >> and people saying aig wouldn't fail. >> one guy. >> a lawsuit.
it's past. we should move forward. >> optics continue to be miserable. today in the paper, rbs, ubs, jpmorgan, it's the cover of the business section. >> still living with these things from five years ago. e-mails and lawsuit, the put back issue back in terms of risk to investors out there, it's still out there, amazing that we are still dealing with many of these things. this week alone, it seems it occurred years and years ago. >> we come back, count you down to the opening bell on thursday h you heard cramer's idea what is am should do with the cash despite einhorn's thoughts on getting rid of preferred. one more look at futures here. great, everybody made it.
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now get 200 free trades when you open an account. a little less than an hour since david einhorn came on our air and talked about apple and cash management that is part of the mad dash today. >> i got to tell you this does matter, apple is incredibly wildly held, because it has fallen dramatically, a lot of people got in at the top. i think there's two apples here. that is a apple a great engineering product company and whether you think tim cook is passion on doing a great job post steve jobs is one thing. but i think that they are doing
fine. they did miss a bunch of quarters. where einhorn's really right is they are anti-shareholder friendly. i mean, if the ultimate thing that comes out on the proxy is we are against something that was proposed that is reasonable, shareholder friendly, that what does that say? what does the statement say? why isn't the dividend bigger? why isn't the buy back bigger? most companies would not tolerate the treasury stance of apple. they would just say it's not good enough. and i think einhorn's right on that. solution, all i can tell you is when you discuss with a company an idea and then you see a proxy, the proxy that your idea is wrong, given the fact that they have used cash, i don't know, intellectually, apple's position can't be defended. >> trying to head him off at the pass. >> right. right. >> doesn't it say that whatever their reason is for saving this money, they haven't communicated it effectively? >> thank you. >> right? >> yes. there must be a reason. >> but say it. say, okay, look, we are looking at developing -- they have said they could be opportunistic on acquisitions.
i like acquisitions, because there's so many great social media company these could own, netflix would be fabulous to compete against apple, amazon what really worries me here is the reaction is so bad right now. he is just trying to fit, he is a large shareholder, he has got idea. hey, put it up for an idea -- put it up for discourse. >> we will talk more about it after the opening bell. also this morning, why are corporate insiders aggressively saling their shares? the reasons behind that trend and what follows suit and which stocks will be the biggest gainers out of the gate, especially on the retail front? opening bell is next. investor. yeah, i'm a serious investor
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he's an architect with two kids and a mortgage. luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense. from td ameritrade. so much discussion on am, haven't got tonight bank of england unchanged, appearance by mark carney in front of the british treasury committee. >> did you see that? >> testifying for a three hours about nominal gdp targets. >> a good package? did he get too much of a house allowance? why did he take the job now? we had to hear he has got a kid in high school. he has got another kid moving
out. it was a grilling. brutal. you couldn't look at the guy for a while. wow. so hard. >> go into what draghi was saying. the dow up seven points, the first single-digit move since december 12th, believe it or not. october, we had a string of five of 11 single-digit moves. a long time since we have moved that little. take a look at the opening bell here. s & p at the top of your screen, the big board today, the harlem fine arts show celebrating black history month. the nasdaq, the consul general, the people's republic of china, celebrating chinese new year this sunday the year of the snake. i don't know if that is good luck year or not. i nose dragson a good year. >> extremely auspicious year. you are born in the year of the dragon -- it i'm year of the dog. any idea, guys? no? >> ox. >> you're of higher stock. >> let's hope.
every year to be that year. >> fix said. i would point out that the chinese consulate, saks says people from china come n ralph lauren call said russian tourist and chinese tourists driving the ralph lauren success in europe, pretty remarkable and they made a point that latin american tourists are starting to drive things. these counsuls are not idle. visas to come to our country, saks doesn't report monthly numbers. >> 1.82, beat by 3 cents, 14 billion transaction, 14% year-over-year for visa. new ceo, owning the quarter for the first time. >> wells fargo downgrade? people are thinking this group is tired? i think that the plastic -- the paper plastic is a big secular growth theme. >> that chart's >> looks like apple -- >> before it was apple.
before it became apple. >> everyone, every company i know, news corp, rupp. murdoch runs a private company public spends a huge amount of time talking about capital allocation, get stock moving. apple stock would be much high fer they addressed this problem in a way einhorn, a very smart guy, not necessarily perpetual preferred but i think the stocks are under pressure, they have offer nod clarity for the cash, a negative some. how. >> it is. it is a negative. >> more of it. if you had in your portfolio this percentage of cash in your net wealth it would be irresponsible, you would be losing money, in effect. >> makes no sense. doesn't make any sense. >> my travel trust agree. >> a number of year ago -- >> who? >> microsoft was and the stock reacted positively for a while and then it returned to where it had come from because, of course, the growth prospects for
the company were still insignificant question. your point, growth is the key -- >> do this in the meantime to get a leg higher until they announce their five-inch phone or apple teeny or whatever that will help the stock in the long run. >> stocks are ridiculous in terms of optics moving stocks again. someone proposed a four for one, i think the stock would move. i think that people are just saying these guys don't care what do we have to do? we have created the largest cap company, sell the stock. not happy with us, sell the stock. not an unreasonable position. you're unhappy? sell. >> interesting battle, one that has to be waged publicly in a way by mr. einhorn and perhaps others because you have such a large shareholder base here
interesting to see if they can muster enough no-votes too get it tossed. >> are you shocked? >> shocked. >> shocked? >> i would say no. >> shocked that the company he put this forward and then shocked that the company immediately puts it on the proxy? >> peculiar. knowing them, not shocking. >> consistent. you're right, carl. consistent with their anti- -- we don't need to make -- we don't need to be friendly. we just need to make money. in the jobs book, the best products, everything good happens. i think that is continuing, einhorn and say, listen, the best products. >> a company that purposely design third phone so you could not tamp we are it or open it up, replace the battery. they don't -- i think they do feel like they know better. i think they feel like they know better. >> i was at the super bowl this guy next to me on "squawk" a bunch of times, he has blackberry. he had to change battery i
almost all of us, the additional 15 minutes, our batteries figure it out, our batteries were dying, everyone had an iphone. says, listen, blackberry, obviously saying -- >> up again today, by the way u >> the launch is really good. but he said apple is so ar began. i was defending apple saying, geez -- >> do you want to take it back now the defense? >> no i did run out of battery tweeting and problem blocksed you in tweeting, verizon problem. the whole thing was a great time. an iphone nightmare. >> a quick check -- a quick check, i should say i on research in moe motion or blackberry, since we are on the subject, trading higher once again, getting closer to the 52-week high mark. got an upgrade from wells fargo following the upgrade from bernstein earlier this week. last couple of new board members who are interesting figures. the former verizon cto and the former sony ericsson ceo join the board of blackberry. so, interesting -- this stock is
having an amazing launch. >> i mean, they are -- the ceo days, they were regarded as being a company in canada, listening only to themselves, bring new people in. it is funny, luke apple and think all the companies that reported this quarter, three of them, great american company, grate innovation over time what do they do? immediately, they announced an even bigger buy back, raised that dividend, 3 m underperformed a bunch of years it has come back. >> more 52-week highs this year than any other stock. >> did you see that? i thought that was a great stat. what did they do? they still felt compelled to be shareholder friendly. >> certainly microsoft and apple it is overseas. you do need to pay significant repatriation. >> leave it there, leave the cash overseas and just use all your free cash. it is generating lots of cash
every day. >> that's einhorn's point. >> right. >> but we are seeing companies try to figure out ways to use that cash. biogene yesterday used the cash overseas because elan is an irish company. so you do also see that as something the companies are focused on. >> i keep thinking about you and -- >> you do. >> i'm friendly kind of guy. hewlett-packard, autonomy, stuck with a bad acquisition, maybe someone at apple says look at these tech acquisitions, how horrible they can be, intel buys mcafee is he still on the loose, that fella? >> he is in town. he is around. you want to talk to him, he will show up right here. >> that guy would walk a mile for a camera. i do think that when you get these companies that made bad acquisition, apple might feel we are not going to go down the path of hewlett-packard. >> true. >> board members, outside directors what do they think, how much do we have to do to
please people? what do we have to do? we didn't take the stock up to 700 that wasn't thanks took it 20700. these two aggressive shareholders took it 20700. now we have to deal with the fact they took it to 700. we didn't do it. why are you looking at me like i'm from alpha centauri? what do i have to do with? >> like to visit alpha centauri some time. >> jim has a place there. only go there is a couple times a year. >> come pick me up. >> all right. >> google maps. alpha centauri. >> oh, google maps, not apple maps. cast asp cast aofficerses in your own passive -- aggressive way you are known for. >> bob pisani, not passive. hey, bob. >> not alpha centaur rick, close star, four light years away, i think?
not light years await is bond market and the stock market what is interesting to me whether or not there's some kind of die verge jones starting here. remember what happened in january, folks, the sale from bonds, bond market going down was definitely a factor, i think, provided fuel, money, cash, for the stock market rally that we were seeing. we are in a narrow range on the s & p the beginning of january and february, somehow has to resolve itself. on the start, even on the advance decline line, transports healthy today, up 18 points. market leader, oil services also on the strong side. did you see the ecb? see the euro drop? draghi came on, said inflation is expected to all in fall and he is going to remain
accommodative, used that phrase several times there is the magic word, euro drops on that, data indicating further weakness in the economy in europe into early 2013 and, of course, he did also make a comment on what was going on in italy and elections there. the bank of italy doing everything it can to help them. he was the governor there. that is a little bit of a political turmoil quandary for him. retail sales, you guys commented on it. i tell you this no postholiday blues, but gap, limited, nordstrom, macy's, all great here. retail metrics sales up 4 1/2%. they had an estimate of 2.8%. that's big beat. you get a 1.7% damage point beat, that's unusually large numbers here and people who were worried about more markdowns. you see the raised guidance? macy's, tjj? gap did, limited comfort around with the estimates. here is the problem i have, if you look at the guidance raised in these companies, very modest, a penny, two pennies here or there l i think the bottom line,
it indicates strong sales were there but it may have some somewhat at the expense of profit, hope two raise the guidance more. bottom line is i think this on these. right now, put a lot of stuff on sale, they sold all of it. it didn't make the quarter dramatically better or worse. i think it was all right. i don't think you can say a lot more than that. february is going to be very interesting because now you've got a situation there's no clearance stuff, they sold it off, february, all new merchandise now. so they are not going to mark down anything in february. now we will get the real influence seen, what's going on. right now, dow down 22 points. guys, back to you. >> thank you, bob. again, i point out that january, someone back in the retail environment all my life, january, the one month that i don't care about. i care about the other 11. anyway, head to the bond pits, rick san telly, the cme group r. >> yesterday talk about the ten-year note yield, the past year and a half, closing base circumstance in the six basis point range, from 195 basically
to 201. really, that hasn't changed, the two-day chart of tens shows you we briefly did trade under 195, use that as the pivot, remember, closed at 176 the end of last year, basically up now 19 to 20 basis points the. might sound like a lot. anybody who traded bonds in a bygone day, know that used to be half a day's range. boone's, 160 as their pivot, very similar pattern. let's switch gears bit. we know the euro a 14-month high against the green back and closer to a three-year high against the yen. doesn't seem like mario draghi's single pillar central bank or not is please about the recent strength. think exports here. his comments? look what they did the euro versus the dollar this chart, look at the euro versus the yen. how did that all impact the dollar? keep in mind, the other central bank's currency, the pound, doing a bit better today but the dollar index, you see there
nonetheless, interday, reflects a really nice pop, maybe more importantly, you might want to really memorialize this because lately you it doesn't last long, we are actually up on the year on the dollar index. maybe the currency wars have gone bigger and maybe it will spread a little bit more aggressively to what's going on in europe. jim, back to you. >> thank you, ring. i saw the fxc go down today because of the -- went right down when draghi mentioned that things could be weaker, be a little more worried. go to sharon epperson at the nymex. >> traders are waiting for storage data to come out of 1030, the fact we have a big winter storm coming here to the northeast not enough to lift natural gas this morning. they want to see what the numbers will bring, we will bring it to you live at 10:30. biggest gainer on the energy complex, brent crude, looking at brent like it wants to get above that $118 level, 4 1/2-month high now, continue to watch what
is happening with iran and the fact that iran has backed away from earlier this week saying it may consider having direct talks with the u.s. that reintroduces the risk premium into the oil market. we are also keeping our eye on saudi production. the latest figures seem to show that saudi production is around 9 million barrels per day in january, the same as december, but that is stale reduction from what we have seen and it is the lowest level we have seen in about a year and a half that is also supportive of brent crude prices. keep your eye as well on gold. gold continues to follow the euro lower. back to you, david r >> thanks very much, sharon epperson. yesterday, of course, talking about two large deals, the leveraged buy out-of-dell and liberty global's plan to buy virgin media. jim had brought up at the time as well, hey, signs of confidence, certainly it is that. it is also a sign of cheap money and something that is worth revisiting as we do occasionally here, particularly when it comes to the high yield market because deals like this would not be happens were it not for the
incredibly low rates that are able to be accessed in the high yield market, in the bank market, for example, $13.8 billion of debt will be part of the dell deal. 2 billion in addition that from microsoft, of that 13.8 billion, a decent amount is going to be a bridge that is going to be refinanced in the junk bond market. interesting, of course, we talked so much about, as you look at the barclay's high yield index, how much money has moved into junk funds, how much capital they have to put to work. a lot of that has been done in the same names. in other words, so much of what we have seen is in terms of issuance has been refinancing of previous deals to take the cost of funds lower, but it doesn't really change the credit calculation for the buyer of that paper. they are looking for new names. they are looking for things like, hey, a dell leveraged buy outpiece of paper and now going to start to get it whether it is virgin media, whether it is dell or whether it is other deals. don't expect to see $25 billion lbos but do expect to seeing?
in the order of 10 to 12 billion being discussed more because the financing markets are there, cheap money is the key. now, something people do need to realize is that when it comes to junk right now, your average coupon is 5.75%. not that long ago, 9, 10%. 5.75%. a lot of the managers staying away from the long end. they are petrified looking a that the ten-year treasury take a look at it ourselves. do you get a significant movement yet again on that ten-year treasury, watch out. but right now, six to eight years where you finance a lot of these deals, they can get it done and they are getting it done, jim, cheap money, confidence, the willingness to take risk, all part of this stew, if you will that is going to auger for more access to companies. >> that's good. con conn inflicting pieces. wave of buyout unlikely to follow dell.
firms are afraid of doing that. >> the bank and private equity firms to a certain extent, love to get behind bigger deals, if possible. the equity check i think remains the key gating issue when talking about as 25 billion deal. typically talking 5, 6, 7, 8 billion in equity. that's tough. two firms maybe, three, four, you don't want to put those many together to do that. the same time talk 10 or 12 billion, a big deal, i would say both are right, those stories. we see those often, tough parse it to understand. enhancing is there the equity check a question in terms of how big it could get because their lps don't like these club deals. >> it's interesting, by the way, to point out one of the reservations in the journal pieces stock have run so much oh john malone, taking in -- >> mike freeze said cheap money is one of the reasons we are
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first the einhorn news on am, now this republican senator marco rubio saying he has had just about enough of am, sort of n a tweet this morning, he wrote "why do i have to get so many chargers for apple? i'm edging closer to samsung with each passing day." the senator is set to appear on the cover over "time" tomorrow and deliver the gop response next week after the president's state of the union address that brings us to this morning's squawk on the tweet, what can congress do to fix apple's woes? tweet us at squawk street. we have your responses throughout the morning. what can congress do?
>> do the most successful company. the stock traded to 700. not traded to 700, would he be doing this proxy statement? just stayed at 400 -- [ inaudible ] >> after market is a $6 billion business, apple gets a third. positive for the company, gets to you buy another charger. >> right. it did. >> frustrating for consumers. >> i know that's one that people don't like the new -- not going over the lithia of what people don't like. dumping on -- >> a lot more "squawk on the street" still ahead. >> coming up, jim cramer's on fire. well, not literally but his six stocks in 60 seconds are super
stand way for the next hour of "squawk on the street," talk about einhorn on am, retailers, the sales figure these come out with why insiders are aggressively selling, it's important and also the ce of expedia will join us live. carl, as you know, a guy that more than doubled his stock price in 2012. >> six in 60 with jim. >> a performer, suddenly the conference call, walk away for business lower margin, people freaking out, a bad call. >> house does yelp have to grow here? >> one of these things, 31% unique visitors, people are demanding, demanding, demanding of this era. yelp giving her all she got. >> a couple weeks after graph search on facebook, too. hlf? >> ackman out with a new letter, one letter about the answers that we have to have. we got a great scoop that einhorn's not pressuring these guys not short.
that's why i think the stock is going higher. no got ton news corp yet. >> they have a shortfall. mostly because of fox, the regular fox, sky italian. what's interesting here, everyone is pressing them doing an espn, fox news, unbelievable numbers. >> disney, people looking -- >> lucas films selling the stock, knew that was going to happen, buying opportunity. >> excelen. >> stock not down on big cut, widely telegraphed, kept dividend, i don't like the stock it has come down. how about tonight? >> star wood, the hotel star wood, putting up 100 hotels in china. fritz van paasschen. >> apple, big all day. >> all day. >> 6 and 11 p.m. when we come back, a lot more analysis of einhorn's proposal for apple. should theism phonemaker listen up closely or just let his call go to voicemail? retail in the spotlight, we
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a little poker face for a man who loves to play the game. david einhorn urging shareholders to vote against the tech giant's proposal a that would eliminate the ability to hold stock. several big names blowing at us, despite the payroll tax worries, sorting through the biggest retail winners and losers. the bulls on a run in 2013. why are corporate insiders aggressively selling their shares? expedia shares double the last year alone. can the travel company keep the momentum going? what about the stiff comp mission? the ceo joins us live in an exclusive interview. back to the news of the morning, david einhorn's plan to put the cash stockpile to work. shares are backing off the early morning gains here. more on that, i want to bring in cnbc's andrew ross sorkin who just angered an amazing hour of television, andrew. >> thank you, carl. >> from rubin to einhorn what do
you think the lead was? >> just watching an activist investor go after apple anyway over thissed 137 billion cash pile onto itself is interesting, the other component, i think none of us, frankly, many apple watchers weren't focused on what he had been doing behind the scenes the past year virtually in conversations privately with apple urging them to issue the preferred shares, issue that would have a 4% yield for every $50 billion that you issue, there would be a $32 jump in the stock. i don't think most people focused on that and the idea that a hall gone and proactively put in its prox that they were going to eflamt the possibility of preferred shares. he is basically taking on a until a way i don't think people imagine imagined. i want you to listen how he thinks about am's mind set having spoken with them the past couple of months, working on
this take a listen. >> in other words, people who have gone through traumas, and apple has gone through a couple tramas in its history, they can sometimes feel like they can never have enough cash. i remember my grandma roz, she was a depression era woman from her childhood, and she wouldn't even leave me a message on my answering machine so i could call her back because she didn't want to get charged for the phone call. >> i don't think we noted this yet, he is suing apple separately in court to unbundle the proxy proposal. what happened is there is a proposal on the table around corporate governance at large and one of the pieces is this idea of the preferred shares. essaying that that actually does not abide by the s.e.c. laws and he is having the thing thing unbundled. i want you to get a quick listen of his view of the stock he has
been long but there was some questions about it, here's david. >> we are long. >> you're long? you have been long a long time now? >> we have owned apple since 2010. >> have you sold in between, taken any profits? >> there's been a little bit of trading but we own -- we own more apple today than we ever have before. >> another head flirngts an apple headline, but one we have been talking about on cnbc, herbalife, after much toing and froing, he don't have a short position and long position in that stock. >> moving a name like apple is not easy to do much investigation, andrew,s as to how this preferred would work, given that so much of their cash is overseas?
>> one of the big things analyst are doing now, i don't think is there a full appreciation of how this would work and whether tough pull money back. i think a sense how much you have to put up front. talking about $50 billion, how much of that is oversea, how much do they have sneer $137 billion cash pile now. i think do it with 30 to 50 initially, try to do more, i think it gets tough in terms of the tax hit. the other question is a $32 jump in apple stock worth it in this context, only because so fall, the stock has moved, frankly certain days, the stock is moving 10 buck, 12 bucks here around there. get your 32 bucks, how long you get keep your $32? >> go get some rest, andrew, already had a long day. andrew ross sorkin. >> more on this bring in tony sack can nagy, he join us on the
news line. great to speak with you. >> like any set of calculations, they are based on a series of assumptions and we could bicker with some of them, the broader issue mr. einhorn is bringing to the table, and one esteemed investor bill miller raised yesterday is that investors are dissatisfied with apple's capital allocation policy, specifically returning cash there is a widespread belief that am does not need to accumulate more cash and should be more aggressive in returning cash. i fully, fully agree with those views. mr. einhorn is putting forth a very specific proposal around the preferred to do that. others have suggested, i believe
that apple should look to take on debt at very low rate and dramatically increase its dividend. others believe that am should return more cash through buy backs. the fact is for a company to have $137 billion and to be adding $40 balance year is destroying economic value for shareholders. you have had different opinions on how to address this issue. >> this cash didn't appear on the balance sheet overnight, just wondering, tony, have you in the past pressed the company and said why don't you deploy that cash? it is simply irresponsiblible of to you keep that much cash on the balance sheet? >> two points i would make, melissa. one is apple is actively talking with major shareholders right now about returning incremental cash. this he did this a year ago in the january to match timeframe. they checked in with their major shareholder, after that, they
announced their initial dividend last march in a stock repurchase program. they are now going through a similar process talking to shareholders. i don't thank you that necessarily means anything, there was a precedent for them having done this and a precedent are them having fall following through with action. first and foremost, i think apple is looking at this. in terms of their responding to the issue, the problem that apple has, like many technology companies is the ma majority of the its cash, 85 billion is offshore around the majority of the cash that it general race is the offshore. for apple to return more cash it will effectively have to pay a tax on that cash. one way around that is to take on debt them don't want to take on debt and don't want to pay the incremental tax, those are the gaining factors providing more cash back to shareholders. >> this perpetual preferred idea
would not necessarily affect that cash but pay out of cash flow. toni, let me ask you another question, are you surprised that apple is proposing to eliminate preferred stock from its charter? does that seem almost vituperative on his part against einhorn for suggesting the idea of this perpetual preferred? >> it's hard to say where that notion came from and where apple wants to eliminate it. in many cases, share holders can want preferred stock provisions eliminated because they can be often used to thwart takeover is the.
wfrmt music to the ears of a lot of people that doubled down to hear einhorn doubled down on his am stake during these discussions there are two elements, aren't there returning cash to shareholders, also the china mobile deal, accessing 700 million subscribers there. >> i think the biggest catalyst would likely be a return, a major return in cash. again, i think apple is talking with shareholders ferc this raise their dividend 15%, not going to do anything for the stock. you're going to need a major change in a allocation poll sfichlt you do, that could be a significant catalyst. >> i get the impression you
don't think that is going to happen because of the way they are gated on the two sides. >> i'm not holding my breath on that. if i'm beating person, i'm not expecting that significant change in poll sit next few months. >> if 15% does not move the needle, what would? even though it might not be likely? >> a 15% increase in dividend, i think really to get value in investor, the constituent apple needs to tap into to own the stock to really move it, you need the dividend in the high 3% range. ideally you want a 4%-plus dividend that will really get the stock moving. >> all right, toni, thank you for phoning in. we appreciate it. toni sacconaghi. boeing 787 is back on the runway this morning for a test flight.
phil lebeau has more. phil? >> show you a live picture out of fort worth, texas, a 787 dreamliner that is about to embark on a fairy flightship. not a test flight. this is a ferry flight, the faa granted a one-time waiver to boeing so that this dreamliner, down in fort worth, being painted, can be ferried back to the boeing facilities in everett, washington, where obviously, it will meet the other dreamliners, grounded until the faa lifts the grounding, at least for test flights. we show you some fresh video we just had fed in from our affiliate in seattle, look at the number of dreamliners parked outside of the assembly lines, if you will, in everett, washington. if we get that picture here shortly. you will see there are a number of dreamliners there we told you on monday that boeing has asked the faa to lift the grounding for test flights. boeing is hopeful that might be granted this week although no indication the faa will, in
fact, lift that grounding. what you are seeing here is live picture out of fort worth, texas, a 787 dream line they're will be embarking on a ferry flight back to everett, washington, within the next hour, it is supposed to take off. at 11:00, the ntsb chairman is going to be holding an update on the 787 investigation and there will be some strong commentary regarding what happened with the faa and boeing in terms of the certification process. guys, back to you. >> thank you so much, phil lebeau. the doj filing civil charges against s & p over mortgage bond ratings. what impact could the lawsuit have on s & p's main ratings comp pet senators. a deeper dive into january retail winners and losers, back in a couple of minutes. but we can still help you see your big picture.
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a lot of retailers reporting better-than-expected sales in january, despite consumers faced with higher payroll taxes, limited brands, macy's and the gap some of the winners. where were the are sweet spot? >> the sweet spots were people running promotion. the last week of january, first week of february, the compares that are coming up for spring, i mean that's really where the stocks are going to focus on. and a lot of companies would
give guidance meaningly below the street where they give q 1 and 2013 earnings. >> who is likely to be on that list? as an example, good january out of macy's but they didn't do much with their guidance relative to the surprise that january was. >> most had a 53rd week which they won't have in 2013. we got raw stores today, very conservative guidance, we think gap will give conservative guidance when they give in a couple of weeks, limited brands, also very conservative. we think, you know, up against a very strong spring, think about the record temps and everyone losing their 53rd week, we think the earning guidance will disappoint the coming weeks, we tell our investors, be cautious, think our stocks will pull back another 5 to 10% potentially the next couple of months. >> have we seen, brian, the
impact of the payroll tax increase? was it smaller than expected, why we got some of the surprise, not a reason why the stocks trade lower but the other reasons will be? i'm curious to when you think the consume letter feel that pinch, if they do and when that will actually translate to spending? >> yeah, i think a lot of companies are watching it. wealth has been moving up the last couple of quarters, home values, home equity loans, obviously, are in the positive column now. so we think some of that is going to offset the payroll tax, but, you know, in general, we are more concerned about a very strong compare for the spring season, weather was phenomenal, great spring selling, color very strong. we think that will be the issue. >> to that point, brian, you mentioned the weather, a strange industry, isn't it, changes in the weather make people go out
and shop, mainly for apparel. we have a snowstorm barrelling toward the east coast. will that change the retail sales figures? do you think there will be some who profit from that? >> yeah. it actually will. we are coming to the beginning of february, everyone starts to sell spring. last year was fantastic. i mean, february and march last year were some of the best two months we have seen in a long time. whether ann taylor, told us they had a big problem from hurricane sandy or aeropostale or tjx, people big northeast exposure will come into the quarter pretty much underplanned for the first couple of weeks. >> brian, at good see you. thank you for your time. brian there on the retail sales figures. a huge day for central bankers, we will talk later in the program about mario draghi at ecb, mark carney going from canada to the bank of england.
the many time, focus closer to home and link-steve liesman, has the chicago fed president charles evans. good morning to you, steve. >> good morning, simon. i want to bring you exclusive parts of the interview which we taped after the live portion ended from the man who has done more than anybody else to promote this idea of the federal reserve using economic targets, a real revolution in central banking. evans sees evidence already that qe, this unlimited qe, qe linked to economic dark sets working. he see it is in auto loans, in a revival in the housing sector, most importantly, he see it is happening in the minds of investors. >> the investment climate seems to be one people are increasingly understanding that very low interest rates on super safe assets are going to be around for a while and if they are worried about that, they need to take on more risk and taking on that more risk will help get the question growing.
>> this is the key to i havens, changing the minds of investors, getting the federal reserve to maintain the policy in place, when it looks like the economy is turning around. the question when will it turn around so the qe can end? >> i have got an outlook. that outlook has the unemployment rate in the range you talk about by the end of 20147% vicinity. i currently think that 6 1/2% unemployment isn't going to be achieved until the middle of 2015, things pick up more quickly that date will appear sooner. >> guys this idea of economic targets going global, you talked about mark carney headed over to the bank of england, some discussionses as to whether or not he adopts a nominal gdp, target japan focusing more on economic targets. so if this works, guy, i have to start thinking crazy idea, why aren't we thinking about charlie evans as a possible replacement for ben bernanke in 2014? something for you to think
about. >> the meantime, steve, i will could ha tell you you carney didn't indicate he was going to be perhaps as revolutionary at the bank of england some hoped target egg the gdp. the bar there appears to be high. steve liesman there in chicago. a major storm brewing along the northeast coast and it is set to dump a whole lot of snow on new england. we will give you the updated storm track. that's next. still ahead, shares of expedia up more than 95% in just the past year, doubling in value. expedia ceo join rust live for an exclusive interview later on in the show. come on, nowadays lots of people go by themselves.
this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. welcome back to "squawk on the street," i'm phil lebeau. looking at a live picture of a boeing 787 dreamliner taking off in fort worth, texas. this is a plane that is on a ferry flight back to everett, washington, to the bowi iboeing facilities in washington. this is not a test flight sharks ferry flight. the faa granted a waiver from a one-time flight from fort worth, where this plane was being painted back to washington. this is a dream line her, first time we have seen a dreamliner take off since they were
grounded three weeks ago by the faa. again this is a ferry flight back to the boeing headquarters. real quick, we want to show you shares of boeing, which are up again today. and this has a lot of people saying why does this stock continue to move higher at a time when there's so much uncertainty about the future for the dreamliner? simon and mel his sark the one thing to keep in mind is there is also a lot of optimism within the aviation community and with the airlines that bowing will eventually come to some resolution with this issue and that it will find way to get the dreamliners fixed and get them up and keep the production schedule as it kur rehn lit is. well, let's turn to the $5 billion lawsuit filed by the doj just a couple of days ago, accusing standard & poor's of inflating ratings on mortgage
securities, before and during the financial crisis. news today that s & p is hiring megadefense attorney john kecker, represented lance armstrong and enron's former cfo, andrew fastow. more on the ongoing controversy, bring in jewels croel, founder of croel bond ratings and croel inc., as well. jewels, first of all, you have launched a bond rating agency. i would assume you saw market opportunity, given what many of us anticipated would be significant pressure on moody's and s & p, the two dominant firms. how has it been to gain currency in this market with the various issuers and the like since you started the business? >> we felt very welcomed. we just finished our first full year of ratings. we ended up in third place in the league tables and cmbs, commercial backed mortgage securities. the investors have really been the key to that. looking for better quality and
legitimate research with no double entran dra. >> assume you are excited, i don't know if that is the right word, tough see opportunity as a result of the pressure s & p is going to be under. >> very clear from this lawsuit that they are going to have years of difficulty defending what is really unconscionable behavior, those of must the field understand has been taking place a long time this is the reason, this lawsuit is the reason i went into this business, to try to change this. this industry, this industry was out of control and this lawsuit calls the question in a serious way. >> floyd abrams, lawyer for s & p, i interviewed a couple days ago on our set, had this to say in my response to that question about the very lawsuit. take a listen. >> the rating yous that were issued were believed by the people who issued them and that's what the government has got to disprove. the government's got to show in this case not that a lot of
people lost money because of their investments. government has to show that standard and poors literally disbelieved its ratings. for the bulk of what you're holding there, there is no proof. >> no proof. >> flood abrams is a long time client of mine in my former life. 's great advocate and great lawyer. i would like to hear from terry mcgraw. you knew what was going on. the e-mail shows it documents show it former employees show it. i love floyd abrams and he is a great lawyer they need a great lawyer because of what they did for many, many years they can weren't alone. >> that is another question here, why not moody's why not be included? some thought this was political pay back acting on behalf of the doj by the freshry, somewhat conflicted, to say to the s & p you should not have downgraded us in the summer.
>> it is a completing her. it is laughable. i testified before congress with the then ce of standard & poo s poor's, deven sharma, they gave the same herring they changed everything that night, 6:40, july 27th, they pulled the plug on all their criteria and commercial mortgage backed. this investigation was going on for 18 months before the down grading of the united states. how dare they say because they downgraded the united states, the game is not over for moody's and fitch by the way or the attorneys general suit you will see or the civil suits you will see. floyd abrams, one of the great advocates in america now being joined by criminal defense counsel. they are gonna need it. >> issuer pays model?
>> we are stuck with it. i tried throughout '09, tried to have a system where the investors would pay for it, small problem. they don't want to pay. i created an investor owned credit rating agency, 50% is owned by institutional investors. and they are very powerful influence over what they want and they hold me accountable. i want to be held accountable, as these other rating agencies should be. it is not just the system of issuer paid but how you deal with it. >> you can make a decision. coca-cola existed for a hundred years. we know what they should you can rated in a way but a structure product comes to out of nowhere, depends on you, in part do-to-decide what the credibility risk s >> 40 years ago, stated a firm that would evaluate rate, if you
will, people four purposes of lend them money, underwriting them it is really no different. we have focused on the structured products area because was that was the area far out of control. by the way, many of the practices you're seeing in this lawsuit, still going on. still going on. shaping -- shaping things in order to get more business. selling out. selling out. no not as if it stopped. >> what evidence do you have, in fact? everyone said they changed their criteria, everybody updated their models, everybody seems to be acting with a good deal more perhaps >> we're in the market every day. if we wanted to jack up our business ander more compliant, we could get more business. the minute i do that i'm out of business. not just about trying to get more business, it's about putting you the investors first, giving them better research giving them transparency and
timeliness and that is still lacking. we put out ratings with 50 and 60 and 80-page research document s these other people, incumbents, quite often, put to you the a press release, it's outrageous, yet they still get away with it because they have been around 100 years but don't fool with mother nature. mother nature will come and get you. >> all right, jewels croel, we appreciate your time. thank you. >> dow down trim digits momentarily here, still down 97. breaking news on nat gas inventories. sharon epperson at the nymex. >> natural gas prices coming off here down 7 cents or so the lows at the session before the natural gas number came out, saw natural gas inventory slip by 118 billion cubic feet down by 118 billion -- 118 cubic billion feet and looking at the slide that is not as great as what
analysts anticipated. they were looking at something for -- in the range of 122 to 126. now, keep in mind that it was colder last week than a year ago but it was warmer than what we've seen over the last several years and we have had a warmer winter on average. that's big reason why we've seen natural gas prices unable to gain any real ground here, even though we have this winter storm approaching. we are looking at prices that back in january fell all the way to 310 and we haven't been able to regain those steeper levels that we saw back in november. so, as we look at prices right knew, we are looking at them off about six cents or so on this number and again, we saw the greatest down draft in the price action about 30 seconds before the number came out. back to you. >> thank you very much, sharon epperson. carl mentioned we took a look floater in market, here, down in the dow by trim digits, now down by 96 points, good for a loss of .7 of 1%. the s & p down 9 points, nasdaq three quarters of a percent. big weights on the s & p and the
dow, ibm down by a percent and ex-son mobile down by 1.2%. biggies weighing the indices down here. also take a quick check on mcgraw-hill. during our interview with jewels croel, hit session lows, the stock trading close to or at 52-week highs prior to the news of the doj's lawsuit against the company. here we are down 1.8%. still to come on the program, why corporate insiders are aggressively selling their own shares and why you need to pay attention to t stick around. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine.
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corporate insiders becoming aggressively bearish at an alarming pace according to editor of the whole bert financial digest. ratios are interesting but 9.2 to 1, that will get your attention. what is going on? >> that is the ratio last week of all the number of their insiders sold of their companies to shares that they bought. it is a ratio that a number of peoplez have been tracking for decades. the data i'm reporting in the column is august research. an alarming number. to be affair, almost as an alarming in late december, the market continued to go up. some people willing to discount
the high number we saw in december as insiders accelerating their sales to beat the tax increase. now we don't have that way of dismissing this it looks like insiders are not betting that prices are going to be going higher any time soon. >> dynamics in december involved policy risk, year-end tax issues. do you think, now we are in speculation mode, but is that reason for selling still the issue or changed to something more macrobased? >> it is speculation based it is a data point that reflects the individual behavior of thousands of different insiders. >> mark, you raise a very important point, not all the indicators are as rose say the headlines demonstrate. many markets are negative for the year overawful and bear in mind other asset markets fallen in the year. what interests me about the insiders is, across the
macrosituation, you have everybody's individual lifestyle and lifecycle overlaid. very often, people who have risen to the top of their careers, they see the markets of 52-week highs or five-year highs and they will, therefore, sell for their own reasons, very different from the question as to whether a 32-year-old who has excess cash should perhaps enter the market. >> that is a very good point. indeed, the researchers who have looked at insider behavior probably put more importance on insider purchase than saturday it doesn't necessarily have anything to do with whether the stock prices are overvalued. the same token, an insider is selling now and otherwise thinking that the price of his stock -- his company something something is going to be higher in a month or two presumably they could way. the other thing to point out you can as recently as the low point his the mark threat last fall, the ratio was down actually
below they see opportunity or lack thereof in the market. >> bears trying town earth all reasons why this rally should be suspect. insider selling, short interest divergence of the russell, the divergence of corporate high yield, do you believe these things add up to something? >> yes, worth pointing out that in fact even though this is just one indicator, talk about it as one indicator, what insiders are doing, it reflect the behavior of thousands of insiders each one of shop looking at the circumstances of his or her company. i think it ends up being a quite a compelling indicator, one insider saying i don't think my company is going to go up the next month or two i will sell t
another one different sector or industry all together is making that same determination it is a sensitive barometer of the economic prospects across the entire spectrum. >> does sort of equalize whatever is unique about their individual situation, doesn't it? >> that is right. indeed the patterns do even though there are a lot of microbehaviors that are added up, it adds up to a very compelling overall macroindicator, yes. >> mark, interesting to have you on to talk about it, dow down 110. see you next time. >> thank you. >> mark hulbert. after the break, a travel company that has doubled in value in the past year and posted yet another strong quarter just this week, expedia ceo joins us live for an exclusive interview. stay tuned. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel.
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dow now down 109 points. >> there is another major storm brewing here in the northeast that could dump upwards of two feet in parts. the weather channel's jen carfagno has the updated track. jen? >> we have winter storm nemo and this means business. look at this area that's going to be impacted by it. everywhere in purple is where we are asking folks to take action today, i think this might be expanded to include places like new york city we are really expecting a very impactful snowstorm, starting tomorrow. here's what's happening. the pieces coming together is one storm system that's coming through the midwest, dropping freezing rain and plain rain and snow in chicago. it makes it to the northeast tomorrow. we have got noir one coming up along the coast, makes it to the northeast tomorrow. and these two combined forces, they fade right off the coast and that combines two storms into one very powerful storm with a lot of wind and the with sind going to be a big deal for travel, blowing around the snow, expecting drifting snow of feet, actual snowfall of over feet as well. we are going to watch this
continue into the morning on saturday. snowfall totals are going to be easily more than two feet here and specifically, boston, picking up potentially more than two feat of snow, could be one of your top five biggest snowstorms on record in boston. melis melissa, carl, back to you. >> jen, thank you for the update. jen carfagno. >> wow. bring in the ceo, an exclusive interview of the online travel giant of expedia, dara cos rah shah hi. how does this affect your business? a lot of companies, a lot of clients, airlines are cancelling what they are doing, a lot of people are changing their bookings on hotels. what do you do internally or what do you see internally as a business in this situation? >> hoping not to make a habit of this, coming on air and about
coming on tv in bad weather. we get all of our call center operations in order. we make sure we have people watching exactly what's happening so we can give flight alerts and situation alerts for consumers who come to our site to see what is happening. at this point, call volumes are normal, wait times are normal. we do have a tiger team that's on there and making sure that we try to give the best experience we can for consumers and partners in these situations. >> talk about the results you published this week the standout is the increased volume of hotel bookings, probably the most profitable area. 19% jump for domestic, 49% jump for international. amount of more information you get for booking rooms is deteriorating what is the dynamic? >> a mix issue.
international volume growing much, much faster than our domestic volume. within that international segment, a very fast-growing area, asia pacific segment, for instance, chinese consumer. chinese consumer at this point, developing, growing very, very quickly but don't book hotel rooms as expensive as american consumers. so we are seeing, as we see the volume of that asian business grow very, very quickly, the average price of our hotel room booked comes down. we think is it is great news, look forward to ten years from now when the chinese consumer books really expensive hotelsed when a think it will happen >> >> the same is happening with air lines, 10% gain year on year in ticket volume offset by 2% decline in revenue per ticket. >> again that is a mix issue as well. as we grow faster in developing markets, ticket prices tend to be lower. we think that is a good thing. near-term, that can cause financial pain but we are here building the business over the long term and we think ten years
from now the success of our business is how have we done in the emerging markets in asia pacific and latin american. we are willing to make the near-term investments. >> you should be congratulated for the share price, well up over 100%, 114% for the year overall you fully war rarnltd says rbc capital markets, fully warranted for the execution that you have. however, at the same time, rbc downgrades you, because it says that your margins are deteriorating, partly because of the investment that you're putting in. as they put it you often underpromise and overdeliver, still the market was hoping that there would be a margin expansion and that is still elusive. >> i think we are going to keep doing what we're doing t got us here around i think once wall street gets universally bullish on you, i think that is beginning for the end, basically. we run our business based on making investments for the long term and we have a set of share holders who this comfortable with that and you see the results. our revenue has been accelerating every single
quarter this year. room night growth has been healthy. so i think as long as we stick to our knitting you, as long as we invest capital in the right place, buying back shares, we have been declaring dividend from our shareholders, from a long-term perspective, we think that's win. >> good to see you. thank you very much for joining us there the ceo of expedia exclusively on cnbc. i want to take you to the mayor of new york city, mike bloomberg, brief egg the press on prep railingses for the storm in the northeast this weekend. expected snowfall in the city, six to ten, maybe 12 inches. boston, of course, talking two to boston, they're talking two to three feet. potentially one of the top five winter storms ever for boston. 250 tons of salt for the five boroughs here and a lot of overtime for all those streets and workers. the worst part will come right around 7:00 p.m. friday night. >> i'm having a dinner party on saturday. do you think i should cancel it? i've got the food arriving today. >> is everybody coming from the
area in manhattan? >> yes. they'll all be coming from lower manhattan. >> should be fine. >> you think? >> yes. >> they can walk. >> should be tough. not that we're invited. >> none of us work. >> i do have one spare place you can fight for it. >> split it three ways. fine. coming up next, rick santelli finds a link between sheila baer of the doj and former treasury secretary rubin's comments on squawk. t move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."
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welcome back to "squawk on the street," today's edition of the santelli exchange. treasury secretary bob rubin. and one clip that everybody's talking about. can we please play the clip? >> what i didn't see, and virtually nobody saw, the regulators, analysts, and with all due respect, journalists, was the possibility of a serious crisis. >> i'll tell you what, keep that in mind, of course, because nobody saw it, nobody saw this serious crisis. he also had some pretty positive, kind words to say about treasury secretary timothy geithner, at least treasury secretary for a little while, which i would like to contrast -- and remember robert rubin, citibank, with some of
the things in sheila baer's book, interesting baer quotes. bull by the horns. the first quote is "geithner skewed bailout to save citigroup." and the second quote is "covering up for citigroup's problems was much of the bailout." draw your own conclusions on that one. let's take another walk back in time to around an op ed in "the wall street journal" that appeared on october 2nd, 2008, and you could read it for yourself. i'm going to read really fast. just pull out a couple of things, and you'll see where you're going. a couple of comments from barney frank, one i liked in particular. "i worry, frankly, that there's tension here. the more people in my judgment that exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to treasury." of course he's talking about the gses. and another comment he made, he said, "i want to roll the dice a little more in this situation towards subsidized housing."
one final quote. representative maxine waters, speaking to housing and urban development. it was a subcommittee meeting. she basically said that we have to stay with subsidized housing. don't fix it if it ain't broke. all right. now, here's the point. nobody ever likes to take away the punch bowl. there was about 500 to 600 notional dollars of value in the otc derivatives market before housing. robert rubin said nobody could have caught it. what about s&p? aren't they included in that group? the reason i read all those quotes is s&p and all the rating agencies -- i don't have any love affair with them, but they're between a rock and a hard place. if they wouldn't have given aaa ratings to these tranches, you heard what barney frank, maxine waters, and a boatload of other politicians, they liked the gses just the way they were. if you spoke out there was anxiety there, you were public
enemy number one. robert rubin says nobody could have seen it coming, nobody except for how many people, including greenspan, talked about the fact that hundreds of thousands of notional over the counter derivatives wasn't going to end well. so s&p here in this claw-back world we live in, whether they were ignorant, as bob rubin says, or nobody wanted to take the punch bowl, which is really the way history will look at, do we think this is right? if they go after s&p, they should go after all the ratings agencies, they should go after all the executives. they should claw back all their pay. i guess i learned something when i was young. death and taxes was one. and the other one is you can't fight city hall. back to you, melissa lee. >> the man who never drinks the kool-aid next to a punch bowl, there's a joke in there somewhere. rick santelli, thank you. >> do you think i should have a punch bowl for my dinner party? >> the one that we're not invited too? i don't care what you have, simon, because i'm not inviteded. >> never mention on air you're having a dinner party because
everyone you didn't invite hears you. i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.
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why she thinks executive compensation on wall street is all wrong. >> see you a little bit later on. if you're just joining us, here's what you missed earlier this morning. welcome to hour three of "squawk on the street." here's what's happening so far. >> if you followed sandy's path and you broke up the banks in some fashion or other, as he described it, the risk isn't going to go away. the systemic risk, the too big to fail risk will move from one place or another place, we think. >> apple has a problem, we think, which is it has a cash problem. it has sort of a mentality of a depression. >> i think that, if they inkr increase the dividend, the stock would go up. they could buy back stock. if they bought back stock aggressively, not just a little bit, the stock would go up. this is an interesting way of returning capital. it doesn't affect the cash position. i regard it as a convoluted way. >> i think there's been a lot
done to raise capital. if you want to know where the too big to fail is, it would be in the european banks that are forced, like we did with treasury secretary geithner, to raise a huge amount of cash. >> take a look at the opening bell here. >> why are you looking at me like i'm from outer santori? what do i have to do for snu >> i would like to visit alpha santori sometime with you? take me back to your hometown? >> the fact is for a company to have $137 billion and to be adding $40 billion a year is destroying economic value for shareholders. >> sure. and you've had different opinions on how to address this issue. >> quite a thursday we have shaping up here. good morning. we're live at post 9 at the nyse. let's get a check on the markets and what is turning into a bit of a selloff.
dow down 100 points. s&p down about 10. after today's selloff after getting an upgrate at wells fargo, blackberry increasing estimates for the fourth quarter and fiscal year 2013 as well. and yelp posted a fourth quarter loss, missing estimates, this despite strong revenue growth in the face of rising sales and marketing expenses. let's get to the road map today. as we said, we are seeing a selloff. the dow off triple digits. we'll find out if there's more losses to come and how you might keep your money safe. plus boeing is pset to propose series of designs for the battery on the dreamliner. then david einhorn says the tech giant apple needs to put its cash to work. see what he said about apple and tim cook earlier this morning and find out what it means for your investment there. and at coast bracing for a winter storm.
we're talking nemo and talking in vermont with how the storm might help business. let's get to the ntsb presser in boston with news of the dreamliner. >> let me provide just a little bit of background on the investigation so far. you'll see in the photo of the 787 an image of the batteries and where they're located. the lithium ion batteries on the 787 are manufactured by gs uasa for the telegraphic installation. this same battery model is used for the primary airplane battery and for the auxiliary power unit, or apu. there are two batteries. the main battery and the apu start battery. the 787 battery that is pictured here is powered by eight individual cells of about 4 volts each that brings the total
voltage of the battery to 32 volts, about 32 volts. the main battery is use d in flight to provide power when all other power sources fail. the event battery is used to start the apu. if the battery fails, the apu will not start, and if the apu is running at the time of a battery failure, it will shut down. during our last press briefing on january 24th, two weeks ago, i announced that we determined three things. one, that the battery had caught fire. two, that we also found that there was an uncontrolled chemical reaction at high temperatures in cells of the battery or a thermal runaway. and we have found electrical short circuiting in some of the cells. since that time, there have been
two tracks that our investigation has been focused on. first, investigators have been working to find the origin of the fire and what caused it. second, investigators have been reviewing battery certification documentation and testing. so let me start by talking about the ntsb lab and what we've been doing. our investigators have completed disassembly of the battery, and they are wrapping up microscopic examinations of the battery, of the cells, and their windings. our review of the flight data recorder data shows that the voltage of the battery had unexpectedly dropped from a full charge of approximately 32 volts to approximately 28 volts. this drop is consistent with the
charge voltage of a single cell. based upon findings from the examinations and identifying thermal and mechanical damage, we believe that the evidence points to a single cell as the initiating event. let me give a few examples of this evidence. this photo shows a top view of the jal battery. you can see eight individual cells. while the entire battery suffered damage it is clear that the left side of the battery exhibits the most thermal damage in cells 5 through 8. the charring that you see in remnants of the photo shows plastic insulating material.
this material charred when temperatures exceeded -- >> if you want to see that press conference continue, it is streaming live on our website, cnbc.com. in the meantime, phil lebeau, a little clarity on the dual track of their investigation, looking at both the battery itself and the certification of making it a legitimate battery. >> right. and, carl, what's interesting is that she's talking about how they're narrowing in on the source of the fire, and they know where it started, but they still don't know the cause of the fire. yes, it was in one of the eight cells, but they haven't said what happened. was it a chemical reaction? was there something thatme prompted that cell to fail? i think it's going to be crucial. we'll listen throughout the press conference, but let's bring you up to speed on what we're expecting to hear from the ntsb today regarding this dreamliner investigation. first of all, it's been three weeks since the dreamliner was grounded. yesterday debbie herzman said they expect at least several weeks before we come to a
conclusion. the focus is on the lithium ion battery and the components that attach to that battery, essentially the electrical system. and finally the faa certification that will be scrutinized. just within the last hour, we want to show you pictures out of fth, texas. this is a boeing 787 dreamliner en route to washington state on a ferry flight. this is not a test flight. it's a flight the faa granted special permission, or ferry flight permission, so it could go back to the boeing facilities outside of seattle. that plane took off. it will be landing in a couple of hours. when it does land there, it will be joining a number of other dreamliners that are parked outside the boeing plant in everett, washington. look at this picture coming from our affiliate earlier this morning. they're stacked up there. remember they've not been able to do any test flights, nor have they been able to do any deliveries. yet they still have production continuing at the regular schedule. these planes are starting to back up there at boeing in everett. finally, take a look at shares of boeing today. two things we want to look at
here. first of all, intraday -- actually, let's start with intraday, look at that. that stock is spiking higher now as the ntsb chair is talking. we'll go back for more commentary in just a bit. also, look at shares of boeing since january 17th. carl, this stock continues to move higher. as i mentioned last hour, there is a belief in the investment community, there is a belief on wall street that boeing will ultimately find a solution here and that they will not have to adjust the production schedule. it doesn't mean it's a certainty that it's definitely going to happen, but that is the belief on wall street. there's a lot of optimism that ultimately boeing will get past this. yes, there will be some kind of a financial hit but not a huge financial hit and that ultimately everything will be resolved. we're going to keep watching the ntsb chairman's press conference, and obviously, if she says anything noteworthy, we'll bring it to you. carl? >> phil, don't go too far. i want to bring in mary schiavo, currently an aviation disaster attorney with motley rice.
formerly department of transportation inspector general. i know you're not here to talk about the stock specifically, but there is this belief this will be fixed. the production schedule won't have to change much. their vendors have given us reasons to believe that. is that a reasonable thing to take home right now? >> yes. there are two big clues for that. one on the reports from the ntsb says they're focusing in on the origin of the fire, and in the south, they're particularly looking at the windings within the battery. they brought in a battery expert from the department of energy. they've been testing at the naval warfare center. it does sound like the ntsb -- of course, remember, they work hand in hand with boeing. boeing is a party to their investigation. it looks like they're narrowing in. when the faa gave boeing permission to make that test flight, it's pretty reasonable to assume that's the first of many. so it does sound like boeing has proposed remedies to the problems. they have to do test flights before the faa can approve them.
it does sound like they're zeroing in on the problem. >> when she says they're looking at the original certification of the battery s that concerning or pretty much boilerplate? >> no, that's concerning, but it's also concerning for the federal aviation administration, a big player here. remember the majority of the recommendations over the years have been aimed at the faa. they're also looking at the certification of the battery to see where the faa didn't do its job because they're in the crosshairs too of the ntsb. the ntsb looks at the big picture, and the faa will be under criticism of their certification and the failure to look at all these problems attendant to the battery when they did so. >> phil, you've got a question? >> mary, i guess the big question would be, when you look at the remedies boeing is working on -- they haven't proposed anything formally yet. how quickly do they likely get an answer from the ntsb? in terms of i know we don't know until we see what the proposal is, but how quickly do you sense that we could see the ntsb say,
yeah, this makes sense. let's get some test flights going in. once the test flights would resume, how long would it take until they would see the grounding lifted? >> technically, they have to ask the faa for that, not the ntsb. the faa will be very timid to act without the ntsb finally issuing its causation. they'll have to issue their cause of this accident and make recommendations, but the faa does not have to wait on those recommendations to be implemented before they can give boeing the green light. i think that, once boeing comes up with a solution and the faa feels like they have a handle on it, the faa is free to give them the green light. it simply depends on how big the changes are, if there has to be any recertification. then the faa has to recertify that small part, or that change, not the whole plane. >> and, mary, real quick. given the fact that the faa is likely to be criticized even more harshly than it has already for how it handled the initial certification of the dreamliner and the battery, does that mean they're going to take even longer, do you think, perhaps
before they say, sure, go back to the test flights and ultimately lift the grounding? >> well, no, but the faa, we used to say the faa is embarrassment proof. the fact that the faa is in for some criticism, they probably are not going to take it out on boeing because, remember, boeing has probably self-certified about 95% of this plane, and they have the expertise, and they will have a lot of their own experts will be presenting to the faa what has been done. the faa will take its lumps and will go on as usual. they do consider airlines and boeing to be its customers. so they will be trying to help boeing. in this situation, boeing might even be trying to help the faa. >> yeah. and, mary, you've said before that you would get on a plane built by boeing before you got on a plane built by the faa. >> that's precisely true because, remember, it was the boeing itself and the boeing designated examiners who really certified about 95% of the plane. we wanted the faa to come in on things like this, the battery,
and what did they do? they issued approval to use the battery even though they predicted -- you've got to give them credit for being clairvoyant. they predicted the battery could have a runaway thermal event. they predicted it in 2007. what happened? runaway thermal event. i think that the signs are good from the ntsb with the tefsting at least with one test flight going on. so maybe there is hope in sight for boeing to get this thing back on track. >> at 7742, believe it or not, that's less than a dollar away from their 52-week high on ba. dow, as we can see, down more than 90. bob pisani is on the floor with a very interesting selloff. >> it was a very interesting open. the futures were much stronger than the open actually was. a lot of the damage was done at the opening. that starts at 8:00 in the
morning. when we hit the open at 9:30, we were fairly flat and then just sort of straight down. it's almost like everybody had a plan to sell right at the open. a lot of comments on what dr. dr draghi said and pretty much in line with what everyone thought, inflation expected to fall. further weakness in q4 and 2013. he's talking about europe. and draghi also said, if the euro strength continued, they were expecting him to say something. euro weakness and euro moving to the down side was the big issue. if you look at the vanguard europe index, one of the main ways to own europe, complete ownership of europe, single etf here, that's a one month. the u.s. sort of topped out at the end of january. we've been sideways for the last five or six days. but europe is more weak than we are and is more weak again today than the united states. so weakness in europe is sort of affecting us.
here in the united states, the weak sectors pretty much a grab bag. everything is down about . about .7, .8%. materials, tech, energy, financial, and consumer discretion. i've been asked about the retailers. it was not a bad report. some of them had very good numbers overall. gap, limited, nordstrom, and macy's had very good numbers. i think this is a simple idea of sell on the strength. february numbers overall, carl, may or may not be any better. this is not a clearance month in february. january, they got rid of it all. january, they've got to sell new stuff. some people thought this might be the top, at least for the moment. >> see you in a bit, bob pisani. art cash, director of floor operations for ubs services. misdirection today or a return of real tail risk? >> we'll find out pretty soon. as bob alluded to, draghi's comments allowed the euro to weaken, the dollar to strengthen, and lately that's been a toxic cocktail for stocks here in the united states. you and i have been talking for certainly at least a week about the potential head and shoulders
that was forming in the s&p. it's turned out to be more of a picasso painting than grey's anatomy. >> not from the blue period either. >> right. instead of a perfect head and shoulders, we had multiple heads. we have quasimodo's hump and a few other things built in. to make it simpler for the viewers, the top was 1515, the head that you were watching more, and the neck line is 1495. the weakness recently has taken us down through 1500. they're trying to defend that right now. the viewers should be alert if weakness resumes, particularly if it comes off the currency then takes us through 1495. that will put the bears temporarily back in control. >> finally, any correlation that's you're watching specifically? everybody is talking about stocks to high yield corporates right now. >> i think the high yields are a great thing to watch. certainly, they've been there
before. the earlier presentation that you did about insider selling, there are a variety of things building up there that give you caution, if not worry. so you want to stay alert here. >> art, we'll talk in a bit. art cashin. meantime, retailers out with january report card. macy's, 11.7 jump in same store sales and raising guidance for the fourth quarter. target also beat expectations with comps up 3.1. mark with more on what gap said. >> gap is down in the red, nearly 4%. there was good news here. january same store sales up 8%. banana republic international segments coming in better than expected. fourth quarter guidance, top analyst estimates. but other analysts pointing out to me signs of concern. one, they said inventories being a bit higher than the company guided at the end of the year. that's a potential warning signal. they also point out the company here is going to face tougher comps looking ahead. gap down about 3.7% right now. carl, back to you. >> all right. that's what you get for beating
the number, i guess. thanks, josh. let's get to the capital markets op ed. gary kay is here post 9 with i'm told a proper too and lots of good stuff. >> maybe we'll get to garbage bags at the end of the segment. but, carl, when i managed money, it was easy to bring in analysts who told you why you owned the stock and why they locked it. it's different listening to people on the other side who are negative about something when a lot of people are positive. we know people are positive on the equity markets right now. if we only brought you people with $2,000 price targets in apple as opposed to tom mcclellan, you're going to hear one side. i wanteded to share something of interest that i've read over the past couple of days that may point to what's happening in the overall equity markets. first thing too is this misperception, i believe, out there about this trade out of bonds into stocks. nick colis had actual arithmetic proof yesterday about why this is not happening. he looked at the bond
portfolios. if you take the average duration of the bond funds out there, you'd essentially have to get the ten-year to 4% before you started eating to house money where you'd actually start to see this mass exodus out of bonds. first fallacy, you're not seeing all this money come out of bonds into stocks. number two, you talked about it earlier today with mark hulbert. this is again the sentiment. look at the sentiment where it is. everybody's a bull. you see it happen with the s&p. you know there's a long-term history of negative correlation here. number three, take a look at this. i know doug cass it out. he's comparing things. that could be the s&p from november of this past year to right now. what that is is january 1st, 1987 to august 25th, 1987. it's an exact duplicate of what we've seen since qe forever was announced. why do i bring it up? the great bert dollman puts out the following. take a look at the next chart
that shows what happened after this next period in 1987. again, bert dollman quoting. we don't want to suggest that something similar is ahead. the point of these charts is surprise happens when everything looks wonderful. number four, i said some weeks ago we're not seeing speculation in the equity markets. we're not seeing that type of speculative stock story stuff. i got this in the mail over the weekend. take a look at this. here we go. we're starting to see this again. confidential, grab yourself an 888% profit when this stock is bought out by apple, google, or netflix. this small cap stock, my friend warren buffett wishes he could buy today. jim cramer can't make this trade recommendation, cnbc. i'm not telling you what the stock is. this is resurfacing. when you are trying to find signs of what's happening, when everybody loves stocks and you're starting to see these things in the mail again, i know we've got to go. this is a warning sign as well as the other things i brought you. you can't only list the people being positive.
makes no sense. we're out of time. can't even talk about the garbage bag story. >> can i open this story on the break? i've got to know what warren buffett wishes he could buy? >> herb greenberg would be all over this thing. that's a little hint. >> gary, thanks. great stuff. when we come back, find out what david einhorn had to say about apple, tim cook, and green light's position in that stock. ♪ [ engine turns over ] [ male announcer ] we created the luxury crossover and kept turning the page,
green light capital's david einhorn urging shareholders to urge against the tech giant's proposal to would limit apple's ability to issue preferred stock. i spoke to david einhorn this morning. scott has all the details. >> it's not usual that a major shareholder takes on apple, but that's exactly what david einhorn is doing. he's asking for a proposal against the proxy that would
limit shareholders purchase of preferred stock. he's unhappy with the way apple is using its cash horde that's now topped $130 billion. >> people that have gone through traumas, and apple has gone through a couple traumas in its history -- they feel they can never have enough cash. i remember my grandma roz. she was a depression era woman from her childhood. she wouldn't even leave me a message on her answering machine so i could call her back because she didn't want to get charged for the phone call. >> einhorn said he approached apple with his idea they distribute a preferred stock that would pay a dividend to shareholders and was rejected. einhorn owns more than 1 million shares of apple's stock and says it's undervalued at current levels. >> we're long. >> you're long? >> we've owned apple since 2010. >> have you sold in between and taken any profits? >> there's been a little bit of trading, but we own more apple
banker in the world. >> it's a big day for central banks in europe, that's for sure. an interesting threat coming through the program today from so many different areas. you see that markets are down in europe again today. jim reed from deutsche bank kicked off the session in europe by pointing out many of the markets deteriorated in europe, credit markets and stockarkets through the beginning of the year. take a look at the spanish, the german, and the french markets which are now overall in negative territory. separately, thomson-reuters has a survey out about how they're seeing continuing cuts in expectations for earnings. there was a 12% growth expected, and now it's just 9%. on the basis of the earnings season we just had, they think the earnings expectations for european companies will be cut back to 5% or 6%. a negative sentiment weighing on europe as indeed it has now for the year overall, so far. meantime, as carl alluded to, a very big day for central bankers in europe today.
mark carney, the man that in july will move from the bank of canada to running the bank of england, did three hours before members of parliament in london today. in the past, he's promised quite exotic ideas of central banking, targeting nominal gdp. in daf ovos he was suggesting t moving forward he would bring ip fla inflation gradually to where it's supposed to be. but he was playing very much by the book to keep confidence in the boe and saying, look, let's just stick with what we know for now and talk about it. >> flexible inflation targeting, in my opinion, is the most successful monetary framework that has been in existence. so the bar for change to that framework, the overall framework, is very high. but i would note that there seems to be an appetite for some debate. >> from london, let's move to
fram frankfurt, where it was the return of mario draghi at the european central bank, to hold his monthly news conference. there was some discussion at the beginning as to whether he was pushing back his expectations as to whether you might get the rebounding growth in europe from the second half of the year to sometime next year. i guess the big news is that he refused to take up the challenge from the french president francois hollande. yes, they would monitor where the euro is, but its strength, said draghi, has more to do with the fact that confidence has returned to the eurozone. >> we heard all over the world now, talking up, talking down currenci currencies. the ultimate judgment of the effectiveness of this strategy is to see what markets make of these statements. >> now we go into a full eu
heads of state summit. it will be interesting to see if that theory about the euro gains further traction. >> let's roll out the red carpet and watch for the arrivals. thanks, simon. let's get to rick santelli in chicago, where we're still talking about your punch bowl this morning, rick. i'll tell you what, it never ceases to amaze me where somebody like mr. rubin could say nobody could have nope, and yet the government singles out s&p. there's more to this story, or maybe there isn't. like i said, you can't fight city hall. one guy always fighting the battle keeping us informed about what may or may not be happening in europe is mark brand, southwest securities. mark, you were just listening to mr. draghi, and many of your comments, along with many traders on this floor, everyone was wondering when a big salvo to lower the value of the euro will be emanating from europe to keep up with the japanese.
has that day arrived? >> no, the day hasn't arrived ye. i'll tell you what has arrived. the way the eu works with the 17 people and the 17 countries in the major zone and the 27 around it. i think you're going to start seeing a significant weakening in the euro because draghi is indicating, is throwing it out there that he'd like to see a weaker euro. i think that's coming, and i think you started that today. >> okay. now let's go back a couple of days, and i'll paraphrase. president hollande of france on tuesday in front of one of these european groups that have been getting together, basically said the following. he said, hey, do we really want to stick with this kind of market driven exchange rate value, or do we need to rethink that? any thoughts? of course, consider the source. it isn't the bastion of capitalism, but it really looks to me like the battlefield of what's happening in europe is definitely going to be in the foreign exchange markets.
>> i think that's true, rick. i don't think there's going to be any big announcement about it. i definitely think you're going to start to see the euro weaken. you point out surreptitiously, but truly hollande is a socialist, and he likes the market when it does when it's supposed to do for france, and he doesn't like the markets when it goes the other way. so i think there's going to be a lot of pressure at the summit meeting today to see what people can do and the central banks can do to lower the euro against the dollar and against the yen. >> one of my least favorite words in the english language of late is the word equaltative. we heard charlie evans use it several times in his discussions with steve leesman. i like quantitative. so what has happened quantitatively, not an opinion, to companies like spain, italy, greece. what has their debt done throughout this process where we've seen funding pressures ease? i know you have a big opinion on this. >> you're right, i have an opinion on that.
you've seen the fundamentals of spain, portugal, ireland, greece, cyprus weaken dramatically. you've seen a tremendous amount of more debt. the other side of the coin, rick, has been -- we won't use your least favorite word, but the easing done by the central banks which have poured money into the european countries and into america, by the way. so there's been a tremendous amount of little blue and green pieces of paper that have to be put somewhere. so if you want to point to one place and one reason why we've seen a drop in yields, it's because money has to go someplace, and it is pushed down the yields of the sovereign debt there and in the united states as well. i think we're about reaching the end of that course, and i think it's going to have severe ramifications for the markets. >> mark, we're out of time. i'm going to get the last word in. all stimulus is fungible. think about that one. carl, melissa, back to you.
mark grant, thank you. >> thank you so much, rick. we should take a look at the markets here. the dow down 116. that is the lows for the session. as we continue to see the selloff accelerate throughout the morning really. there's been no rest from it. we'll see where it goes this afternoon. also want to get a check on energy and commodities. sharon epperson live at the nymex. >> gold is acting like you might expect it to act. we are seeing some strength in the gold market. what's interesting is the turnaround we've seen in gold this morning. it is much weaker, and a lot waiting to hear draghi's comments after waiting for the ecb decision. and also listening to what charles evans had to say and we may see a continuation of the bond purchase program from the end of the year maybe into next year. that is something that is seen as somewhat supportive of gold as we may have qe3 here. we're continuing to watch the price of gold. and between brent and wti. we are looking at oil prices in
the u.s. falling, of course we're seeing in the stock market. on the north sea, we're looking at a slide in the supplies there, perhaps a 10% slide in supplies, and inventories there due to some planned maintenance of one of the largest oil fields. that is supportive of brent crude prices and why we've seen brent crude above $117 a barrel today. continue to watch natural gas, particularly with the storm coming. yes, we're seeing a lot of weakness in natural gas after that storage report, but the forecast is for much colder temperatures over the next 11 to 15 days, carl. be watching that very carefully to see if there's a change this afternoon in the price of that contract. >> sharon, thank you very much. when we come back, look out east coast because nemo is headed our way. no, not the fish. the winter storm could dump as much as two feet of snow in some areas like boston. we'll get the latest track of that storm. [ male announcer ] i've seen incredible things.
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bloomberg held a press conference earlier on snow preps. and meantime, ski resorts in the storm's path could not be happier. bill singer, chairman of the slopes in vermont, but he joins us, how convenient, from sunny miami. this is good news. the timing of it, the geography of it. tell me how it's all going to play in your hands. >> we're very fortunate as an industry in new england to have a great storm before christmas, and it looks like we're going to have another terrific storm this weekend, and it's going to set us up beautifully for the presidents holidays coming up in a few weeks. this storm will represent tens of millions of dollars to the new england resorts, and vermont is going to be benefitting tremendously as a result. >> it's coming a couple of weeks before a lot of schools in massachusetts have february vacation. bill, correct me if i'm wrong. i've heard it said that it's not so much you want snow in the north. it's when you start to get snow in the southern part of massachusetts where people
realize, oh, my gosh, it's winter. let's go skiing. is that sentiment really -- does that play happen? >> that is absolute ly spot on. when we have snow in the suburbs of boston and new york, people think about skiing. they think about being in the mountains. they think about coming to vermont. we couldn't be happier with this storm. it's going to be a tremendous asset for the entire industry. >> tell me about -- i mean, i'm from colorado where the lift ticket prices in vail these days, they make your head spin. how much pricing power do you have? how much have you been able to raise prices in the past couple of seasons? >> well, i think that you'll find that the package prices in vermont are really affordable. because we're so close to new york and boston, people can drive. they don't have to fly. they don't have to worry about rental cars. they can drive up, buy a package for their family at jay peak. we have plenty of that and also have a new indoor water park that's great for packaging as
well. the storm, the indoor things we have, the access, the package pricing, it's very affordable. we're excited about this storm. >> before we let you go, tell me about the day in the life of a mountain executive as the storm is each proiapproaching. we know the mayor is making big plans. do you go into snow making big time, or does the natural snow take care of that? are you more worried about clearing the roads and infrastructure? >> we've been making snow all winter long, and we continue to make snow right through the end of march. right now we're on storm preparation mode. our snow plows are ready. our groomers are ready. all of our staff -- there's a lot of smiling faces at jay peak today because this storm is going to make for the best weekend of skiing we've had all year and set us up for the next two or three weeks of great conditions. >> finally, one last sort of especially log on this, we all know what gas prices are doing, the ratio of income, percentage
of income americans are spending on gasoline are close to record highs. is that an offset, or is it not a factor where you are. >> the benefit of a new england ski area and a vermont area like ours is that we're a gas tank away from being there. from new york or boston or hartford, it's an easy drive. it's an affordable drive. you put the kids in the van, and you drive up. it's a very, very economical way to ski. >> well, watching some of that video makes me wish i weren't in the office today. we'll be watching to see how the season goes for you, bill. thanks again. >> thank you. >> want to check the markets. the selloff, as we said earlier, accelerating a bit. dow is now down 128. that is the low of the day so far. not coincidence that europe just closed about 15 minutes ago. when we come back, one of the street's top voices on apple gives us his take on einhorn's call for the company to finally put its cash to work.
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morning, famed short seller david einhorn is suing apple saying the company needs to do more to unlock value for shareholders. >> apple has a problem, we think, which is it has a cash problem. it has sort of a mentality of a depression. in other words, people who have gone through traumas, they sometimes -- and apple's gone through a couple traumas in its history -- they sometimes feel like they can just never have >> joining us on the cnbc news line, gene munster, internet analyst at piper jaffray has an overpriced at apple. it's a tough one for someone to come on and say, i own more of this than i ever have, i think it's a great company, and i'm suing them because they're not returning enough capital. does he have an uphill battle? >> he's got a lot of support with investors. i know, just in my conversations with the buy side, what he's saying is exactly what a lot of the buy side is saying.
they're really getting tired of this obsessive amount of cash that apple has had. this is nothing new to the story. i think in some ways einhorn is really being a voice for what the broader buy side thinks and some of their irritation about how this has played out. >> do you think it's excessive, 137, half of market cap of microsoft? is there a rainy day rainy enough to justify this? >> i mean, i don't know what the right adjective to describe how excessive it is, but they could pretty much buy up the broader internet and still be comfortably -- with a comfortable amount of cash. it's part of their culture, as everyone knows, is to have this kind of cash. but eventually apple needs to really take two focuses. one is on products, which we feel really good about the products that are coming. i know the street is not as optimistic, but we're comfortable with what's coming outs. and the second is they've got to do more with their balance sheet. i think doing things like this, eliminating the option for preferred stock, i think, is just a step in the wrong direction.
talk about why it's coming out, as you put it. unless you have information we don't have yet, people have a good sense of what the year's going to bring, and they're not valuing it the way you are. >> i think this whole cheaper phone is something that a lot of people are expecting, as we are. this would be probably launched with china mobile. we're thinking september quarter. the fundamental difference is we believe it could have an acceleration in growth profit dollars. most of the buy side we talk to when we talk about the cheaper phone is focused on the negative margin impact. we think that's not the best way to think about this. so we haven't seen the build plans yet from asia. we're about 65% of the new sm t smartphones are sold below $400. apple needs to make a move into that market. that's one piece. second is this ever elusive television we still expect late this year. i think those two in itself
could be catalysts to the stock. >> i guess those are questions that have to be answered another day. in the meantime, gene, last question. have you heard of or seen evidence that suggests they are actively discussing ways to return capital? maybe not in the way einhorn would like, but taking this dividend closer to the fore? >> yes, we would expect them to raise the dividend again. what they've said is they'd revisit that policy on a yearly basis, and they started it a year ago. while we may not get what einhorn wants here, but ultimately an increase in the dividend periodically and on an annual basis, we think, is in the works. >> gene, appreciate you coming to the phone. always good to talk to you. gene munster from piper. "squawk on the street" is back in a moment. i'm lorenzo.
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them moving sharply higher. some folks figure it makes more sense fixing up a car they have rather than buying a new one. that's helping advance this space. advanced auto parts is shooting higher. beats on the bottom line. same store sales fall, but less than the last quarter. another one is o'reilly automotive. their fourth quarter income pops 8%. and same store sales hit a record. carl, back to you. >> at least something's working, josh, with the dow now down almost 130. thanks. we're seeing quite a selloff in the markets here today. joe greco of meridian equity partners here with me at post 9. europe is closed. this is normally the time something would happen. >> exactly, at least to the up side. you'd see a little relief from the selling. we started premarket with the euro trading off. george soros starts to beat the drum and go against the currency there. there's a lot of concern about a prolonged recession or a depression there. a lot of names simply aren't
producing right now, and people are starting to shed. now that we've broken the 1500 level in the s&p, the question is do we close below it? do we continue there all day, or have a little rally in the second half where it would look a little more optimistic for friday? >> you think the point where the bears are handed the ball is 1500? >> psychologically, it's a nice number. really 1492 is kind of important for me from a technical level. if we can hold that for the rest of the afternoon, i think we're in good shape. if we start to break down over the second half, i'm concerned for friday and what comes over the weekend. >> it's not like we weren't handed any good news. a lot of these retailers beat handily in january, but there were weird calendar effects, and they're facing tougher comps as we get into the spring. the bulls haven't been able to use that as any leverage. >> use it as any leverage? remember we're up 5% on the year. a lot of that may have been the optimism of those numbers, now you're wondering, do we really start to double town down on
those bets now? if you're having a lot of headwind accumulate on the front. storm coming into new york. perhaps there's a little bit of a storm coming into the market, and people saying, hey, without anything real happening here domestically, we need to look over in europe. if things are start to go boil over again, we could have a little problem on our hands. >> do you think this does lasting damage to the argument that people were exiting bonds en masse and that mom and pop retail participation was coming back big time? >> i'm not a financial adviser, but i read the articles. clearly, it seems that a lot of people saying the flows were going in that direction or they're predicting it's going to continue to be the case if it wasn't already. i continue to see more in my world that people are really focusing on single stocks rather than a broad based concern. people are starting to find and pay attention to the outside concerns and the undervalued names in each sector. for the people i talk to the people that listen in that language, you've got to drill
down every three or four names in that space and find the true winners or diamonds in the rough that will produce better in the second quarter. >> we do see a divergence of performance in each sector. finally, the bears are saying i was talking about insider selling last week, see? this is one of those i told you so kind of moments, whether it's levels of margin debt or a segment on insider selling earlier on. >> sure. they're feeling their oats today. >> they could be, but is it going to last? is it today and tomorrow just the effect of a little bit of a breather, little bit of a sigh? perhaps people are recalculating where they want to be versus where they were in the beginning of the month. and they're saying where do we go from here? some people's estimates are only up 10% for the year. if you're really only halfway there, you've got to figure out how to outsize and outpace everyone in the marketplace. i focus on drill down. a company that's beaten down a little bit, had negative news, perhaps see if you can scoop some on the cheap there, and as
it recovers, you'll profit handily. >> let's get back to headquarters and the halftime. >> carl, thanks so much. welcome to the halftime show. right there is where we stand. not a pretty day on wall street. down 115 points. the s&p 500 right at 1500, had actually dipped below that for a short period of time. we're all over the market moves. david einhorn takes on the most valuable company on earth. the real david and goliath story. we'll certainly be trading all of that. we want to get straight to the traders on market action. josh brown watching the markets today. josh, the question becomes, is this now finally going to be the start to the correction that people have been expecting? >> everyone wants this correction to happen, which is really interesting. even the perma-bulls are begging
for this correction because nobody's long enough if we're going to continue to go up as we have in january. here's the good news. february historically is the worst month in the s&p going back to 1928. 48% of the time it's down. and typically it's not down much. it's a little bit less than 1% on average in those years. so i think that, if we do get a pause, this would be the perfect time to get it, and it would coincide with a lot of this political stuff that's going to start to heat up in the next week or two as we get closer to the sequestration deadline. so that's kind of the way we're looking at what the action is telling us this week. >> simon, to borrow a football term, american football, break down the play, if you will, for me. what's going on here today? why are we now at the lows of the day? is it fear about europe, global growth, the sectors of the market that would be more susceptible to that are the ones pulling back the sharpest. >> today specifically is fears of what's going on in europe.
we saw the european market close a little bit. people are looking for any kind of excuse to take money off the table in the short term. i think you see any news in the headlines and people pulling out. we talked about it. i think people are dying to get in. the market's down 1.5% here. it might be down 1% or 2%. they might get some support and people get back in the markets. take someone off the table, be very patient. now is the time to get back in and buy the dibs. >> what areas are you looking to get in? you're running real money. what kind of areas will you look to work in? >> some of the technology names, some of the finance. stay away from the retail parts, talking about housing and the home depots, the lowe's, those type of things, and stip with things that seem to be working. >> for people wondering s this finally going to be it? is this finally going to be the pull back, however sharp it is or not? what do you think? >> to these guys' point, everyone is talking about a